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Global Digital Transformation Spending to Reach $3.9tn by 2027

DigitalCIO Bureau by DigitalCIO Bureau
November 3, 2023
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Global Digital Transformation Spending to Reach $3.9tn by 2027
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Digital transformation (DX) remains a global priority as organizations seek to become digital businesses where value creation is based on the use of technologies for processes, products, services, and experiences. To achieve that objective, worldwide DX spending is forecast to reach nearly $3.9 trillion in 2027 with a five-year compound annual growth rate (CAGR) of 16.1%, according to the International Data Corporation (IDC) Worldwide Digital Transformation Spending Guide.

The global focus on digital transformation is reflected in the geographic distribution of DX spending. While the United States will account for 35.8% of worldwide DX spending in 2023, that figure is nearly matched by the Asia/Pacific region (including Japan and China) with a 33.5% share of spending. And the Europe, Middle East, and Africa (EMEA) region will deliver 26.8% of DX spending worldwide this year.

“In Europe, Digital Transformation spending is growing at a fast pace, and we estimate a CAGR of 16% across the 2023-2027 timeline. In this context, investment opportunities will vary depending on countries, industries, and use cases,” said Angela Vacca, senior research manager, Data and Analytics, Europe. “The fastest growing geography will be the Nordics where Financial Services and Telecom/Media companies will be the most dynamic, growing their DX spend by more than 20% across the forecast period. In France, the fastest growing Use Case will be Machine Learning–Driven Predictive Analytics in the Healthcare Provider industry, which will grow by 32% over the period to 2027. This shows that the European market is dynamic and diverse and that opportunities need to be pinpointed.”

“Digital Transformation has taken center stage across enterprises in the Asia/Pacific region as the focus continues to rapidly shift from traditional business models. Customer Experience, Innovation, and Efficiency are leading to business models that are boosting both productivity and profitability for businesses. With a young and growing population that is more tech savvy than older generations, rapid infrastructure developments towards urbanization are diving the demand for digital offerings both in products and services. Integration of multiple 3rd Platform technologies such as Cloud Computing and Artificial Intelligence coupled with a need to cater to real time customer experience will continue to push investments further across industries with specific use cases as priorities in the Asia/Pacific market,” said Mario Allen Clement, associate research manager for the Asia/Pacific IT Spending Team.

The two largest DX use cases in terms of global spending are both focused on using technology to improve operational efficiency. The largest use case – Innovate, Scale, and Operate – is a broad area covering large-scale operations, including making, building, and designing activities. Core business functions that make up this area include supply chain management, engineering, design and research, operations, and manufacturing plant floor operations. The second largest use case – Back-Office Support and Infrastructure – includes core business functions such as accounting/finance/billing, human resources, legal, security and risk, and enterprise IT. Combined, these two use cases will account for more than 35% of all DX spending in 2023.

Another important use case for DX investment is Customer Experience, which includes all customer-related functions and related technologies supported by DX. Core business functions that make up this area include customer services, marketing, and sales. A closely related use case is 360 Degree Customer and Client Management, which enables better engagement and experience throughout the customer journey. Together, these two use cases will represent more than 10% of all DX spending in 2023.

The fastest growing among the more than 300 DX use cases identified by IDC include Mining Operations Assistance, Robotic Process Automation-Based Claims Processing, and Digital Twins with five-year CAGRs of 32.6%, 30.6%, and 28.5%, respectively.

Discrete Manufacturing is the industry with the largest DX spending throughout the forecast, accounting for roughly 18% of all investments worldwide. Some of the top use cases include Robotic Manufacturing, Autonomic Operations, Inventory Intelligence, and Smart Warehousing. The next largest industries in terms of DX spending are Professional Services, where the focus is on operational efficiency use cases, and Process Manufacturing. The Securities and Investment Services industry will experience the fastest growth in DX spending with a five-year CAGR of 21.1%, followed closely by Banking and Insurance with CAGRs of 20.0% and 19.2% respectively.

Tags: Digital TransformationDXEMEAIDCInternational Data Corporation
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